Banks turning to hybrid cloud to help battle digital disruption

April 22, 2015

By: Krupal Raval, SVP, Finance, APAC

Across Asia, and around the globe, financial institutions are facing challenges on two key fronts – and both need immediate action.

On one side, rapid changes in technology are powering new and exciting ways to conduct business. Digital technologies are changing everything from back-end systems and processes to delivery channels and go-to-market strategies. New technologies are also creating opportunities for new entrants to challenge established players. Service providers such as PayPal and alternative currencies like Bitcoin are classic examples.

At the same time, customer expectations are also quickly evolving. Armed with internet-connected mobile devices, customers are demanding new services from their banks and expect always-on, reliable channels through which to access them. Together, these trends have been dubbed 'digital disruption'.

At the recent Asian Banker Summit 2015 in Hong Kong, the challenges of digital disruption were tackled head on. Attendees discussed the steps financial institutions need to take to address them and the potential implications if they’re ignored.

During my presentation, Growth Drivers of Digital Banking Channels, I noted that economic growth in Asia will drive the region from representing approximately 25% of world economic output as it does today to more than 50% by 2050. Such dramatic growth has profound implications for the banking sector.

As well as facing changing demands from existing customers, banks will need to cope with the large portion of the population that remains unbanked. It's estimated that the percentage of adults with a bank account has increased from 51 percent in 2011 to 62 percent in 2014. Banks therefore need a plan to deal with a rapid upsurge in both new customers and transactions.

From a technology perspective, many banks are coming to understand the importance of partnerships. Rather than trying to build everything internally, growing numbers are opting to forge alliances with partners who can provide the required services and capabilities.

This is particularly evident when it comes to growth in the area of hybrid cloud. Increasingly, banks are augmenting their on-premises capabilities by taking advantage of hybrid cloud resources. With a hybrid cloud approach, as demands rise, storage and processing capacities can grow as required.

At Digital Realty we have considerable experience in helping our customers create hybrid cloud-based infrastructures. In fact, 6 out of the top 10 global financial institutions are amongst our clients.

By adopting a hybrid IT infrastructure, a bank gives itself the option of retaining some workloads in-house whilst shifting others to a cloud provider. The result is an agile, scalable platform that can support the business even during times of rapid change and growth.

Naturally, choosing the right hybrid cloud solution is critical. Your cloud service provider must be housed in state-of-the-art data centres designed to provide the levels of service and reliability demanded by the finance sector. Having 'five nines' of reliability is mandatory.

Through careful selection, a bank can be sure it is best placed to tackle digital disruption and is ready to meet the demands of rapid economic expansion. Hybrid cloud can provide the platform that will underpin growth now, and in the future.